Consumers will pay higher energy bills unless the UK government speeds up work on a vast programme of upgrades to the electricity grid to enable the switch to renewables, the public spending watchdog has warned.
The National Audit Office (NAO) said that without faster action the extra costs associated with managing the ageing power network, which are ultimately passed on to the public, could reach £۷.۸bn a year by ۲۰۳۰.
A £۷۰bn programme is under way to modernise Great Britain’s network of pylons, overhead lines and substations so that more power can be carried from wind and solar farms and other clean energy sources to homes.
Labour has said its plan to decarbonise the grid by ۲۰۳۰ will keep consumer bills lower than they would otherwise be, but the NAO said that if the planned upgrades did not happen fast enough then bills could rise instead.
Of the ۸۰ projects it said were needed to meet the target, just ۱۶ are finished and most are in their early stages.
Gareth Davies, head of the NAO, said the planned upgrades would “test systems not designed for activity at this pace or scale”.
He added “Value for money now depends on delivery. Failure to implement these necessary grid upgrades will hamper economic growth as well as increase consumer bills.”
When the grid cannot carry enough electricity from where it is generated to where it is needed, the system operator pays windfarms to switch off and gas plants to switch on elsewhere to meet the demand. These so-called constraint costs are added to bills, and reached £۱.۹bn in ۲۰۲۵-۲۶. Without faster upgrades, the NAO said, they could climb as high as £۷.۸bn by ۲۰۳۰.
Meanwhile, the £۷۰bn investment will require transmission owners – the private companies that build and manage the network – to more than quadruple their annual spending on upgrades, from £۲.۵bn in ۲۰۲۵-۲۶ to more than £۱۱bn by ۲۰۲۷-۲۸.
Ofgem, the industry regulator, believes households would be about £۳۰ a year better off if the upgrades happen at the required pace because of the reduced curtailment costs. But the NAO said meeting that schedule would be “very challenging”.
It said some of the projects were already forecast to run beyond ۲۰۳۰, meaning “some new generation” was likely to connect before necessary grid upgrades were completed.
“It is important to minimise this gap, as delays will increase project and constraint costs and postpone the benefit of achieving clean power,” the NAO said.
It added that neither Ofgem, the National Energy System Operator (Neso), which balances the grid, nor the government publishes enough data on the cost and progress of projects, and called for more transparency.
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Geoffrey Clifton-Brown, the chair of parliament’s spending watchdog, the public accounts committee, said: “Renewables now generate the majority of the UK’s electricity, but the grid has failed to keep pace and is in dire need of upgrading to support the transition to clean energy.
“As one of our most important pieces of infrastructure, the grid must be capable of meeting rising demand whether that is from new homes or datacentres.
“[The Department for Energy Security and Net Zero], Ofgem and Neso must deliver critical projects on time and provide transparent reporting so parliament and the public can hold them to account.”
Ofgem welcomed the recommendations, adding that the planned upgrades would “reduce costly constraints on the system and help shield consumers from volatile international gas prices”.
“Protecting consumers and driving down costs remains our priority,” a spokesperson said. “Funding is released in stages, costs are rigorously scrutinised and companies face financial penalties if they fail to deliver.”
The energy minister Michael Shanks said: “This report is another stark reminder of the cost of years of historic underinvestment in the grid … Our once-in-a-generation reforms are finally building the infrastructure we need: reducing our dependence on the fossil fuels that leave households exposed to price spikes and helping lower people’s bills for good.”
Neso also welcomed the NAO findings. A spokesperson said: “We are doing everything within our control to keep balancing costs down while maintaining security of supply and will continue working with government, Ofgem and network companies on the strategic planning needed to support delivery across the system.”
